Proposition 118: Paid Family and Medical Leave Insurance Program, Explained

October 12, 2020

Voting yes on Proposition 118 would guarantee that workers across Colorado can take at least 12 weeks of paid leave from their jobs for family medical purposes. It would be funded by fees paid by workers and employers.

Voting no would keep things the same. Colorado workers do not currently have any guarantee of paid leave. A federal law known as FMLA guarantees that some workers in the U.S. may take unpaid leave for 12 weeks.

A simple majority is required for the proposition to pass.

Progressives and labor reformers in Colorado have tried to pass a similar law through the legislature since 2014, but have fallen just short in recent years. Eight other states and Washington, D.C. have established similar laws, starting in 2002.

The Colorado proposal would offer paid leave to cover serious family medical emergencies, childbirth, adoption, a family member’s active-duty military service and reasons related to abuse and sexual assault.

The program would be funded by requiring many workers and employers to pay fees equivalent to 0.9 percent of a worker’s wages, starting in 2023. Those fees could rise to 1.2 percent under the law. Businesses with nine or fewer employees would not have to pay the employer half of the premium. Local governments and employers with equivalent paid-leave plans would be exempt. Self-employed people and gig workers could choose to pay into the program and be eligible for the benefit.

In 2024, the maximum weekly benefit is estimated to be $1,100. Lower-wage workers would get up to 90 percent of their wages covered, while higher-wage workers would get a smaller portion replaced.

Supporters argue that paid leave is crucial in an economy that now requires both parents to work in many households. Companies increasingly offer paid leave as an incentive for high-income employees, but it’s rarely available to lower-wage jobs. Only 16 percent of private industry workers nationwide have paid family leave, according to the Bureau of Labor Statistics. 

One study of California’s law found “no evidence” that firms faced higher wage costs as a result of paid leave, and found that employee turnover was reduced. Surveys conducted in 2009 and 2010 by the Center for Economic and Policy Research found 91 percent of businesses reported no negative effect on profitability

In contrast, the National Federation of Independent Businesses projected that previous versions of the Colorado proposal would cost jobs and money in the long run. The campaign against Proposition 118 is titled “No On Prop 118: Higher Taxes, More Bureaucracy, A Lavish, New Program Destined For Bankruptcy.”

Critics argue the fees being advertised are too low to support the program. A Colorado-based group known as the Common Sense Institute argues that the program could become insolvent as workers rush to take leave. It modeled different scenarios and found that in a “high” usage scenario, the program would quickly run out of money.

An actuarial study by AMI Risk Consultants found that a similar program that offered up to 12 weeks off for childbirth — combining 6 weeks for medical disability and 6 weeks for family reasons — would remain solvent with a premium of less than 0.9 percent, while a more generous 28-week program could eventually require premiums of 1.45 percent.

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Editor's Note: This article was updated with additional context about an actuarial study.